News Disney’s Q2 FY25 Earnings Results Webcast

[Agent H]

It’s good to see the wood laid around here…

He has GOT to go…stop being apologists because you like a day in the magic kingdom and Pennsylvania sucks…

Big picture

So we should complain non stop on behalf of people who are upset even if we don’t agree?

 

[BrianLo]

You’ve got your chance to long here.

Admittedly I’m not a finance bro and this took me a second, but yes I bought stock at 86 one and two years ago. I only have a select few from the companies I know way too much about.

I know I’m an outlier on optimism here. It wasn’t a good stock last decade, but that’s a good thing if you weren’t invested. I think the company has finally finished the pivot out of the legacy linear media implosion.

 

[Sirwalterraleigh]

So we should complain non stop on behalf of people who are upset even if we don’t agree?

Well “we” is a subjective term

People come here for many reasons

Some use it if for purely info…
Some to pump/pick themselves up
Some do trip reports aimed at thin air (I never got that one?)

More power to all of them. It’s not up to me or anyone to tell them what is important to them

But if you’re gonna go into history, management, financials, strategy…it’s not gonna be all warm and fuzzies. Interpreting missteps/mistakes is kinda needed. It’s how we learn

 

[Agent H]

Well “we” is a subjective term

People come here for many reasons

Some use it if for purely info…
Some to pump/pick themselves up
Some do trip reports aimed at thin air (I never got that one?)

More power to all of them. It’s not up to me or anyone to tell them what is important to them

But it you’re gonna go into history, management, financials, strategy…it’s not gonna be all warm and fuzzies. Interpreting missteps/mistakes is kinda needed. It’s how we learn

you’re dodging the question. I don’t care that people complain. But you apparently insist that the people who do enjoy the product overall ignore that and complain anyway.

 

[Sirwalterraleigh]

So, other entertainment companies in the same boat is irrelevant? Just a random happenstance? A coincidence that even their closest rival is sitting around the same levels? Do all of those companies also have terrible management? A bunch of these companies that deal with entertainment underperforming the market as a whole over the same time frame has nothing to do with the massive, seismic shift on how entertainment and advertising is consumed over the last 10 years? None of that, just Iger and his lackies?

Come on man, we all know some of this is very much going to be on Iger and company, but a bunch of it isn't. That doesn't give Disney management a pass, but it seems to me like many of the things you don't like about them are the same things that Wall Street types tend to cheer.

It’s not irrelevant…but it does explain away mistakes or strategy that has begun to fail that is being reinforced.

There’s two distinct chapters in bobdom…just as there was from his predecessor. Their ends will be the same. And there’s not unreasonable about that.

The disconnect is he would have been fired by now for failing his own self appointed mandate upon his self determined return…by the market. You don’t make money…you’re out.

But when you appoint and manipulate your own board…the investors have no safeguards. That’s what Roy fought Michael on - fundamentally - in the end. And that’s what is going on here. It’s no longer “strategy” it’s ego and vanity.

 

[Dranth]

It’s not irrelevant…but it does explain away mistakes or strategy that has begun to fail that is being reinforced.

I wanted to pull this line specifically because I think this is where we often disagree as I don't see it as explaining away mistakes or approving of any given policy/strategy. Those still exist and I think most of us here are reasonable enough to separate what are legit company caused issues vs. external factors.

Sure, personal taste, personality, experience, etc. will cause disagreement on if a particular decision is good or bad as well as its overall impact but I doubt there is anyone sitting around these boards that is thinking Disney doesn't make any mistakes.

 

[Sirwalterraleigh]

Sure, personal taste, personality, experience, etc. will cause disagreement on if a particular decision is good or bad as well as its overall impact but I doubt there is anyone sitting around these boards that is thinking Disney doesn't make any mistakes.

The list is long, but distinguished…

First day on the boards?


I tell you what though…with the Benefit of hindsight…much becomes clear:

Here’s a dooze. If it happened today…those funds don’t line up behind Bobby and Peltz and/or Rasulo get those board seats. Because after all the bluster…what they were accusing turned out to be correct

 

[Chi84]

you’re dodging the question. I don’t care that people complain. But you apparently insist that the people who do enjoy the product overall ignore that and complain anyway.

It’s a sort of social justice complaining from what I can tell.

 

[Sirwalterraleigh]

you’re dodging the question. I don’t care that people complain. But you apparently insist that the people who do enjoy the product overall ignore that and complain anyway.

I’m being more than fair…my patience is not known to be a strong suit

It’s a sort of social justice complaining from what I can tell.

Check the profile. I am trying to be nice under the circumstances.

And you’ll have to explain “social justice complaining” to me…

Is that like saying the fastpass kiosk was too far from the gate at rockinroller coaster so we’re better off paying to prebook it now?

Use small words

 

[BrianLo]

The list is long, but distinguished…

First day on the boards?


I tell you what though…with the Benefit of hindsight…much becomes clear:

Here’s a dooze. If it happened today…those funds don’t line up behind Bobby and Peltz and/or Rasulo get those board seats. Because after all the bluster…what they were accusing turned out to be correct

Quite the opposite, the company is in a much better place today than it was 24 months ago. For your thesis to hold even the tiniest bit of truth, there’d be a new lineup of raiders at the door.

The whole reason we’re facing so much controversy now is that we have seen recovery after a bottoming. And I don’t need any clap backs about not understanding the company is flat decade on decade, I’ve never said otherwise.

 

[Agent H]

I’m being more than fair…my patience is not known to be a strong suit

Am I not reading this correctly or does this not make sense with what I wrote?

 

[Chi84]

Am I not reading this correctly or does this not make sense with what I wrote?

You got it perfectly correct so there’s no response.

 

[BrianLo]

In case others did not understand the arguments I was making, net income is artificially lowered because of acquisition and impairment charges.

You could make 60k for a number of years and serially invest and defer your 401k tax benefits. Then one year make 100k and claim 60k of deferred tax credits and say your net is 40k.

Would you claim that individual is less “profitable” that year? Only in the eyes of the IRA. Technically that year they not only made more but they also paid less taxes than ever before.

This has occurred with Disney with impairment charges (namely Star India) and the Hulu aqusition; when trying to compare fiscal 2024 with 2018. In reality they made the same money when you actually strip away those things.

What happened from 2019-2023 was primarily a linear decline, startup Disney Plus costs, a contraction in the theatrical landscape, a major political and corporate raider episode(s) and a temporal collapse in their worldwide experiences business with a pandemic (which by the way is now significantly fiscally stronger than 2018 by 152%). The latter of which is extremely negatively correlated to their stock price by circumstance. I understand that’s a lot of excuses… but they are the excuses.

Since 10 years ago: linear makes 3.9B less and parks + consumer products make 5.3B more. That’s really 75% of the story, but I know people want to draw their own narrative from only the top line numbers.

 

[Sirwalterraleigh]

Quite the opposite, the company is in a much better place today than it was 24 months ago. For your thesis to hold even the tiniest bit of truth, there’d be a new lineup of raiders at the door.

The whole reason we’re facing so much controversy now is that we have seen recovery after a bottoming. And I don’t need any clap backs about not understanding the company is flat decade on decade, I’ve never said otherwise.

The accusation was timidity leading to Lack of investor return and longterm sustainability

And a year plus later…nothing has changed.

And if that accusation sounds a bit familiar

It’s almost exactly what Roy E and Stan Gold accused Eisner of in 2003…

Roll the tape.

 

[BrianLo]

@Dranth as for your musings - I think the problem is Disney straight up lacks consistent peers on a ten year scale. Absolutely their peers were legacy media. But one divested, one was gobbled by a telecom, one is really a Japanese tech conglomerate. The remaining major two pivoted poorly towards 2025.

They used to have close comps. Now they are like a 50% peer to Comcast, a 30% peer to Netflix, a 25% peer to Royal Caribbean etc.

WBD and Paramount I guess are the story because they both failed to evolve in their own ways from legacy media and the cash cow that was linear.

 

[Sirwalterraleigh]

In case others did not understand the arguments I was making, net income is artificially lowered because of acquisition and impairment charges.

You could make 60k for a number of years and serially invest and defer your 401k tax benefits. Then one year make 100k and claim 60k of deferred tax credits and say your net is 40k.

Would you claim that individual is less “profitable” that year? Only in the eyes of the IRA. Technically that year they not only made more but they also paid less taxes than ever before.

This has occurred with Disney with impairment charges (namely Star India) and the Hulu aqusition; when trying to compare fiscal 2024 with 2018. In reality they made the same money when you actually strip away those things.

What happened from 2019-2023 was primarily a linear decline, startup Disney Plus costs, a contraction in the theatrical landscape, a major political and corporate raider episode(s) and a temporal collapse in their worldwide experiences business with a pandemic (which by the way is now significantly fiscally stronger than 2018 by 152%). The latter of which is extremely negatively correlated to their stock price by circumstance. I understand that’s a lot of excuses… but they are the excuses.

Since 10 years ago: linear makes 3.9B less and parks + consumer products make 5.3B more. That’s really 75% of the story, but I know people want to draw their own narrative from only the top line numbers.

Kiwis and watermelons comparison.

But the last part. Who got caught in the linear collapse? Wasn’t like it snuck up from the bushes. And by their own numbers…this “highly profitable” streaming service is covering 1/4 that loss annually…without inflation adjustment. Indeed…such a brave new world.

But look outside the same numbers.
Parks make so much more!!!

Do those parks have no price ceiling? Are the costs capped and will not eat more of the revenue.
Or are we just gonna not look behind the curtain?

No one is ever has to agree with me…I wasn’t lose any of the little sleep I get…

But three things can be true:
1. Disney isn’t going bankrupt
2. Disney isn’t thriving
3. Eventually the urge to get “quick money” will backfire on us…not them…us

Number 3 is the one you gotta watch out for.

 

[BrianLo]

The accusation was timidity leading to Lack of investor return and longterm sustainability

And a year plus later…nothing has changed.

And if that accusation sounds a bit familiar

It’s almost exactly what Roy E and Stan Gold accused Eisner of in 2003…

Roll the tape.

Your perception is that the company has been timid recently? They’ve been writing unending promises like he’s about to… retire.

The timescale investor return is being evaluated on is the last couple years and those have changed. I know why everyone wants to hone in on the ten year scale… but your argument regarding corporate raiders is exclusively hinged on comparing 1-2 years ago versus now. Yes Peltz has a better argument today than 10 years ago, but a far worse one today than 18 months ago. That was your commentary I think is inaccurate.

 

[BrianLo]

Do those parks have no price ceiling? Are the costs capped and will not eat more of the revenue.
Or are we just gonna not look behind the curtain?

They absolutely do have a ceiling. If all their promises are for naught, definitely we’re at the end of the road

IF (and I appreciate your position is complete skepticism) we get 8 more ships, that’s a resort worth of growth. IF we get a 7th resort, that’s a steady stream of licensing. IF we get actual expenditure in the parks, they can grow. At least Paris is more a when right now, little argument that’s growing.

So we’re really on the same page. Show us these investments or they are cooked.

 

[Sirwalterraleigh]

Your perception is that the company has been timid recently? They’ve been writing unending promises like he’s about to… retire.

The timescale investor return is being evaluated on is the last couple years and those have changed. I know why everyone wants to hone in on the ten year scale… but your argument regarding corporate raiders is exclusively hinged on comparing 1-2 years ago versus now. Yes Peltz has a better argument today than 10 years ago, but a far worse one today than 18 months ago. That was your commentary I think is inaccurate.

They were incredibly timid for years. The kitchen got hot…and promises of ambiguity flowed. The sequence of events does matter.

You missed the visible jerk of the knee. Someone got called out and saw his spotlight flash before his eyes. Evidence is there.

He has no plans to retire…but a huge part of the power struggle last year was to put in a bad light to force him out.

You really think if that proxy didn’t happen we would see anything but the status quo? In a way…we still are…they just rolled out a new projection show to play on it.

But the Fox is in charge of the henhouse.

 

[Sir_Cliff]

The idea that corporations have to make more money year after year is one of the biggest problems with American society.

Precisely. It is kind of bizarre that we see some of the biggest critics here of how the company is being run to maximise profits for short-term gain jump up and down and feel vindicated when quarterly profits, attendance, or the share price don't grow enough according to their standards.

Embracing the need for Disney to squeeze higher and higher profits from the parks quarter over quarter or the share price to rise ever upwards isn't going to result in the company plowing more money into the parks to improve the guest experience with an eye to longterm brand loyalty. It encourages them to squeeze as much blood from that stone as they can and then discard it when they don't see any opportunities for it to continue generating sufficient growth. I am sure plenty of the investors who drive the share price would much prefer they did that than invest billions in new attractions, for example.